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Added to identify potential compliance issues resulting from governance and management practices; IRS has informally indicated that “no” answers could lead to compliance checks or possibly audits
Inquires about number of “independent” members of governing body; final instructions provide detailed definition of “independent”
Includes the question on family/business relationships between officers, directors, trustees, key employees; “reasonable effort” must be made to obtain this information – for example, an annual questionnaire
Moves reporting of compensation of highly compensated employees and independent contractors from Schedule A to core form, which extends reporting requirement to all NFP organizations; threshold raised to $100,000
Final instructions indicate that a “reasonable effort” must be made to obtain compensation data from related organizations
Adopts concept of “reportable compensation” as shown on Form W-2 or 1099, resulting in better comparability of data; includes compensation from related organizations if more than $10,000
Organizations that cease operations or dispose of more than 25% of its assets
Can include sales to another exempt organization or a taxable entity, sales of assets by a partnership or joint venture in which the organization has an ownership interest, transfer of assets pursuant to a reorganization, or grant or charitable contribution of assets to another 501(c)(3) organization
The Internal Revenue Service recently issued regulations that require written advice regarding tax matters to meet very detailed and comprehensive requirements before it can be relied upon by a taxpayer to avoid penalties that might apply if the tax benefits or results discussed in the document are disallowed. Compliance with these rigorous standards and requirements exceeds the scope of this engagement. Consequently, the analysis and advice contained in this document regarding federal tax matters is not intended to be used, and may not be relied upon by you, for the purpose of avoiding any federal tax penalty.
Carol LaLonde, CPA 750 Trade Center Way, Portage MI Phone #269-567-4587 Thank You!